New emission laws for London's 21,000 black cabs are set to give taxi maker Manganese Bronze an uplift in sales over the next two years as drivers will be forced to replace ageing vehicles or have modifications made to existing vehicles meet the new guidelines.

The new Euro ruling - which comes into force in July - will give cabbies two years to make the upgrade or fork out around £30,000 on a new cab.

All London taxis will have to comply with the new emission laws by July 2008.

Ian Pickering, chief executive of Manganese Bronze, which owns Coventry-based London Taxis International, the maker of the flagship TX11 taxi cab, reckons around 16,000-17,000 London cabs could be affected by the changes and that this could result in an uplift in sales.

"Most cabbies will probably choose to modify their vehicles rather than buy a new model, but some will decide to splash out on a new cab," he said.

The group's taxi repairs and servicing unit Mann & Over-ton could also benefit from some of the modification work.

Analysts reckon sales growth over next two years will be driven by these factors and the group's plans to expand into foreign countries. The group is currently looking at Mexico and China as two potential areas of growth.

The company, which last year returned to profit for the first time in four years, showed that the recovery had continued into the first half of 2005-06 as pretax profits for the six months to January doubled to £1 million.

Analysts expect a further improvement in the second half and Andrew Douglas at stockbrokers KBC Peel Hunt reiterated his 'buy' recommendation for the shares based on the future opportunties for sales and profits growth. For the current year to July, he has increased his pretax forecast from £2.2 million to £2.7 million.

Revenue was £39.1 million against £41.2 million.

The interim dividend is also being doubled from 1p to 2p a share and Mr Pickering said that, following the recent sale of a property in Ipswich for £4.2 million, surplus cash could be returned to shareholders via improved dividend payments.

KBC Peel Hunt reckons the group will pay a 6p total for 2005-06, but has the scope to improve on this. Last year, the group paid a total of 4p to shareholders.